Growing Doubts About For-Profit Public School Management

For-profit public school management is on the decline across the country. In 2007 about half of charter schools that entered into management contracts did so with a for-profit company. Three years later, that number fell by 25 percent. In New Orleans, all of the for-profits that came in to manage charters after Hurricane Katrina are now gone. Opposition to for-profit public schools in Mississippi is growing fierce.

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When the Mississippi Department of Education tried to recruit a for-profit company to manage schools in rural Tate County last year, parents petitioned against it.

For-profit education management companies, known as “for-profits” for short, typically ask for 10 to 15 percent of a school’s revenue.

Patricia Johnson, whose son attends high school in Tate, says schools are already struggling to afford the most basic of needs, so allowing for-profit management companies to take a further cut off the top seems counterproductive.

“That doesn’t make sense,” says Johnson. “Because there is no way parents have to buy stuff like classroom needs for the teachers, copy paper and all that. That’s crazy.”

The idea that a company could make money managing an elementary school irks some, but the for-profits say fees aren’t at odds with providing a quality education. Michael Serpe is with EdisonLearning, one of the largest for-profit providers in the country.

“Your bottom line is the quality of the education you provide,” says Serpe. “And, frankly, the outcome and the performance of students in the school.” Serpe says if you don’t have a good product, you won’t be in business long.

Nationally, the portion of charter schools managed by for-profits has declined by 25% in three years. In cities such as New Orleans, some for-profit providers were fired or left in disgrace. Where for-profits are drying-up, nonprofits are gaining ground.

In Tate County, Mississippi, many parents were skeptical and spoke out. Their state senator, Steve Hale, fielded much of the outcry.

“When you draw off funding… it can cause some great concern,” says Hale. “It’s basically taking money we don’t have.”

Last year, bids ended up coming in two and three times higher than the Mississippi Department of Education wanted to pay. All were declined and the schools remain publicly run. But Hale’s concerns have only deepened as the for-profit debate has grown statewide.

In this year’s legislature, two charter school bills are circulating. One would allow for-profits; the other would ban them.

Nancy Loome with the Parents Campaign lobbies to keep for-profits out. She says the concept itself is flawed.

“They’re trying to make a profit to pay shareholders,” says Loome. “They aren’t going to be investing much to educate children.”

Loome and other opponents are watching for-profits and their political influence closely. The companies are investing heavily in lobbying. Reports filed with the Mississippi Secretary of State say for-profit education providers K-12 Inc., Connections Education and E2020 spent more than $250,000 on Mississippi lobbyists in 2011 and 2012, with more spending expected this year. That doesn’t include money from numerous advocacy groups - such as the Black Alliance for Educational Options and the Florida Foundation for Excellence in Education that promote school choice including private school vouchers and charters in the state. In some cases these groups, such as the Florida Foundation, are funded directly from the profiting companies.

Still, some stakeholders are hesitant to ban for-profits before Mississippians get to see how they perform. Dave Ellis is a parent of a middle school student in the high-performing Clinton school district. He says public offices often successfully subcontract to private entities. For-profits build roads, repair sewer systems or manage parking.

“What we have to do is have a carefully crafted regulatory process that make sure the public money that we are using to go do those things is invested wisely and spent wisely,” says Ellis.

Lobbyists and lawmakers advocating for for-profits say the approach could save money. Republican Chairman of the House Education Committee, John Moore.

Moore: “We have a system in place now within our prison system where for-profit institutions actually have to do it for 10 percent less than the government is doing it.”

But even Moore sees for-profits as a point of compromise. Falling in stride with many state lawmakers around the country, Moore also voted to bar for-profits last month. The Mississippi legislature is expected make its final decision on for-profits later this session.